What does ULIP in mutual funds mean?

Unit Linked Investment Plan.

ULIP is a life Insurance product, which provides risk cover for the Policy holder along with investment options to invest in any number of  qualified  investments such as Stocks, Bonds or Mutual funds.

 

ULIPS are investment plans and insurance plans mixed together and that is a very wrong thing. An insurance should purely be taken thinking you will not get anything in return but you will be protected financially if anything happens. When you start mixing insurance and investments you can never get good returns and these policies are bad as they have more premiums too in comparison with term insurance which gives you a big cover on a very small premium.

ULIP stands for Unit Linked Investment Plan. These are similar to mutual funds but comes with insurance plans. Your money will be invested by experts of the insurance company in stock and debt markets (as you choose how much in each). Your money will grow/lost as per the stock markets and debt schemes that the fund is invested in.

You will be charged with AMC and other charges as per your ULIP company policies and also charge you the premium amount for the insurance you took.

Usually ULIP funds are locked in for 3-5 years during this time you cannot take out your money and has to stay with your fund. After that you can continue or withdraw from the fund.